February 23, 2021
Re: § 58.1-1821 Application: Individual Income Tax
Dear *****:
This will reply to your letter in which you seek correction of the individual income tax assessment issued to ***** (the “Taxpayers”) for the taxable year ended December 31, 2015.
FACTS
The Taxpayers, a husband and wife, filed a 2015 Virginia income tax return in October 2019, reporting an overpayment of income tax and requesting a refund. The Department denied the refund because the return was filed beyond the refund period allowed by Virginia’s statute of limitations. The Taxpayers appeal the Department’s denial, contending that their 2015 return was first filed in 2016 and an error by their tax preparer resulted in the rejection of the timely filed return, for which they did not receive notice.
DETERMINATION
Virginia’s taxing system is largely based on the theory of self-assessment. A taxpayer computes his own income and tax, fills out his own return, files the return, and pays the tax indicated. Virginia has implemented a self-assessment system based on the federal system because it is less intrusive upon taxpayers, simpler, and less costly to administer. Consequently, taxpayers are responsible for the information provided on income tax returns.
Under the circumstances, a taxpayer’s reliance on an accountant to prepare income tax returns, while understandable, does not relieve the taxpayer of the responsibility for ensuring that the return is filed and the information reported on the return is accurate. Further, in a situation where a taxpayer relies on an accountant, lawyer, tax preparer or other tax professional and such professional provides inaccurate or erroneous advice that results in a liability, the taxpayer has recourse against the tax processional for the error.
As for the request for refund, Virginia Code § 58.1-499 A provides that in the case of any overpayment of any tax, whether by reason of excessive withholding, overestimated and overpaying estimated tax, or error on the part of the taxpayer, the Department shall order a refund of the overpayment. Virginia Code § 58.1-499 D specifies, however, in pertinent part that:
No refund under this section … shall be made… whether on discovery by the Department or on written application of the taxpayer, if such discovery is not made or such written application is not received within three years from the last day prescribed by law for the timely filing of the return … [Emphasis added.]
Virginia Code § 58.1-341 A requires that a taxpayer file an individual income tax return by May 1 of the year following the tax year for which the return is filed. Based on Virginia statutes, the due date for the Taxpayers’ 2015 individual income tax return was May 2, 2016 (May 1, 2016 fell on a Sunday). As such, a return was required to be filed by May 2, 2019, in order to receive a refund for the 2015 taxable year.
The Taxpayers contend that they filed their 2015 return in 2016. The Taxpayers explain that the return was rejected due to an error by their tax preparer, and that they did not receive notice of the rejection. The Taxpayers’ have not provided documentation sufficient to prove that they did, in fact, file the return in 2016.
According to the Department’s records, the original 2015 Virginia income tax return was not filed until October 2019, well after the statute of limitations had expired on May 2 2019. The provisions of Virginia Code § 58.1-499 D are clear and do not provide the Department with any discretion in enforcing the three-year limitations period to apply for a refund. Accordingly, I must deny your request for a refund of the overpayment of individual income tax for the taxable year ended December 31, 2015.
The Code of Virginia sections cited are available on-line at www.tax.virginia.gov in the Laws, Rules & Decisions section of the Department’s web site. If you have any questions regarding this determination, you may contact ***** in the Office of Tax Policy, Appeals and Rulings, at *****.
Sincerely,
Craig M. Burns
Tax Commissioner
AR/3487.A